Regain Control
In recent years, there has been a renewed interest among our tribe to establish single-member professional micro-corporations (SMPCs) in order to escape the suffocating control of employment to large corporations. The formation of an SMPC empowers you to be able to work as an independent contractor in multiple workspaces.
An SMPC is a type of corporation that is owned and operated by a single individual, typically a licensed professional such as a doctor, lawyer, or accountant. The rise in popularity of SMPCs is due to several factors, including the desire for greater control over one’s professional life, increased liability protection, and the potential for tax savings.
SMPCs provide you with greater autonomy over your professional life and can be used as an alternative contracting entity rather than you as an individual. In that context, every traditional W-2 job can be converted to a 1099 independent contracting job.
By operating as a corporation, you are able to make decisions about the direction of your professional life without the need to consult with partners or a board of directors. In a single-member professional corporation, you are the CEO and board of directors all in one. You get alone determine the combination of W-2 and 1099 income sources that will support your preferred lifestyle built around your professional life.
You can set up this type of corporation in order to provide medical services without having to worry about the legal and financial complexities that come with running a private practice. This type of corporation when used with a PC-employment lite structure also provides an opportunity for you to focus on clinical care without having to worry about administrative tasks such as billing and accounting. By setting up a single-member micro-professional corporation, you can enjoy the benefits of running your own business without having to take on all the associated risks.
You Are A Business
Every practicing doctor should form a single-member professional corporation as the foundational step for preserving their professional autonomy.
You are among a special group of service professionals who have the power to individually create a business called a professional corporation (PC). This means you have the power and choice to engage in the economic playing field as an individual tax entity or as a single-member corporation, or both.
Thus any revenue-producing work that you perform professionally can be organized to flow to you as an individual or as a corporation—and this includes the most common choice among doctors today—which is employed by a large corporation. For example, if you choose to work as an individual for a large corporation it is called traditional employment, but if you choose to work for them as a professional micro-corporation it is called employment lite—and it flows through your PC.
The point here is that you have earned the right to have options for your job structure and too many doctors have forgotten they have this right—and only think they can work as individuals and not as a micro-corporation.
Today I am going to review how a professional micro-corporation can fit into any job that you encounter and thus help you envision that you truly are an SMPC. We’ll start by viewing it through something so fundamental that you don’t even think much about it—your contract.
Contract
Doctors minimize this document and reduce it to the myopic focus of “How much am I getting paid”. It’s a mistake to minimalize a contract’s importance, and this is why I recommend at a minimum, you confirm the fair market value of your contract compensation for only $297 with my friends at Contract Diagnostics. This is money well-spent for EVERY doctor and you can do this here.
A contract is evidence that you engaging in a business relationship for your professional services. You have the power to do this as an individual or as a professional micro-corporation. But the contract is evidence that large corporations view you through the lens of being a micro-business—and it’s why it is framed as a contractual relationship with a time frame, terms, and 90-day cause termination clauses. Most W-2 workers around the world don’t get contracts like this—unless they are viewed as businesses or contractors. So although THEY would like to define the relationship as an individual W-2 relationship, you have the right and power to request that the relationship be defined as 1099 independent contractor (assuming you have prepared yourself for this moment—hint-hint)
A contract is a legally binding agreement between two or more parties that outlines the rights and responsibilities of each party involved. It is an important document that can help to protect the interests of all parties involved in the agreement. Contracts are used in a variety of contexts, from business transactions to employment contracts to service contracts They provide a framework for understanding the obligations and expectations of each party, helping to ensure that all parties are treated fairly and that everyone’s rights are respected.
Specifically, a physician contract is a legal agreement between a physician, or their PC and an organization or employer. It outlines the terms of employment for the PC or individual physician, including salary, benefits, duties, and other obligations. It also sets out the conditions under which either party can terminate the contract. Physician/PC contracts are essential for ensuring that both parties understand their rights and responsibilities in relation to each other.
There are 3 Basic spaces that all of your contractual relationships will fit within:
-
Individual to Business—aka traditional employment as an individual W-2 worker
-
Business to Business—aka independent contractor through your micro-corporation as a 1099 worker
-
Business to Individual—aka self-employment through your micro-corporation with direct-to-consumer business relationships without 3rd party involvement.
If you are working as an individual W-2 employee, your contract will usually be entitled to an “employment agreement”
If you are working as a professional micro-corporation 1099 independent contractor, your contract will be entitled to a “professional services agreement” (PSA)
Stop Thinking Like The Masses of Workers
Democracies are comprised of 3 stakeholders that all have to operate together in order for all to thrive: The government, businesses, and individuals. The tension of balancing the power of these three is a continuous process that allows us to avoid communism, socialism, and anarchy.
Due to the economic opportunities involved in healthcare GDP-the tension of these 3 in the macro-economy has led to individuals getting squeezed out and the healthcare economy has now become a “clash of the titans” whereby the government and big business are fighting for control over the individual patients and workers in healthcare. These two stakeholders now own and control more than 90% of the space as you and your patients have been reduced to commodities in their economic machinery.
You can see this drama playing out and it has informed you—in order to thrive in the macro-economy you have to accept your status as an individual worker. That is because as a small business, you are aware that you lack the money, power, and business skill to compete with the larger corporations. In the economic playing field, big businesses have the deep pockets to either defeat private practices or simply buy them out and eliminate them as competition. Wisely, you assess your best option is to individually sign up to work for the large corporations as their employee in what they call their “safe harbor.” According to Medscape in 2021, 74% of doctors chose this option for employment and that trend is growing.
Don’t Be Brainwashed
But I want to warn you that when you blindly start to view yourself like the masses—as individuals who have little to no choice but to go to work for a corporation—you have been duped into forgetting over your lengthy training experience has resulted in you being called a professional—which has multiple perks and privileges associated with it.
The truth is that you are not just a powerless individual who is forced to humbly accept the mantle of “employee” to some large corporation.
If you think your only option is to be a W-2 worker, then you have been brainwashed—by the big businesses that trained you.
Ahhh— perhaps you naively thought the big businesses of colleges, medical schools, and training hospitals were altruistically focused on training you to be the best doctor in the world—yes—but—-they were also conditioning you to be their workers after you matriculated.
It’s kind of a sinister and conspiritist view—but it’s true. In undergraduate and medical school you actually pay them to indoctrinate you—and then in post-graduate training, they pay you to learn how to be an obedient worker.
Since this is all that you know, and pretty much everyone you are exposed to in the system is an employee of large corporations—you follow the rules of mentorship and mirror what your mentors do—you sign up to be an employee—after you finish training.
It’s what you observe in your mentors and peers, it’s just about the only option touted by recruiters, and employers lace their traditional employment offerings with sufficient financial incentives—that you can’t imagine anything else besides employment.
Since you are a master of observation and a quick learner, you astutely determine that your peers, mentors, and the system must have it right-this is THE PATH, and pretty much the only logical path—especially if you want to work within a safe harbor that has built-in regulatory compliance and the simplicity of just seeing patients and getting paid.
Working as an employee in a safe harbor is pretty much what every doctor does—don’t they?
Safe Harbors
Safe Harbors were developed by large corporations as a space for doctors to practice within whereby the employer was charged with the responsibility to make sure you were compliant with all the rules and regulations that are associated with medical practice—whether that be The Stark Law, Anti-Kick back regulations, and OSHA regulations within a medical clinic. Basically, employers assured doctors that they would manage all of this and thus free you up to simply see patients and get paid to do it.
Thus employers wisely created these harbors as a magnet for doctors by giving them two fundamental ingredients: stable paychecks and not having to run a business.
I still see these as a major advantage of physician employment. (although I strongly prefer employment lite over traditional employment)
In order for this to happen, large corporations asked that you engage contractually with them as an individual taxed as a W-2 employee, rather than as a business taxed as a 1099 contractor. This gave them full control over all government compliance regulations for your professional practice and thus they became responsible for the ongoing reporting and oversite. This is a huge win for you to be able to offload this to your employer rather than having to self-manage it within the framework of traditional private practice. Thus going to work in their “safe harbor” insured that you would not break any federal or state laws and even better—you wouldn’t have to manage or be responsible for any of it. All you had to do was sign an individual employment agreement as a W-2 physician—and start getting paid.
Simple enough.
But what you failed to recognize was that as an employee, they now control you.
So this arrangement allowed you to avoid the onerous government oversite and compliance regulations associated with operating a business in private practice. However, in exchange, you now traded that in for the oversite, compliance, and bureaucratic control of your employer over your professional life—-which slowly becomes a force that erodes your professional autonomy.
Frog In The Boiling Pot
It’s like the frog in the boiling pot analogy that is often used to illustrate how people can be unaware of the gradual changes occurring in a risky environment. In this analogy, a frog is placed in a pot of cold water and the temperature is slowly increased until it boils. The frog, unable to detect the gradual change in temperature, is eventually boiled alive.
This analogy has been used to describe how people can become accustomed to changing conditions over time without noticing them until it’s too late. It also serves as a warning for individuals and organizations to be aware of their surroundings and take action before they are overwhelmed by changes that they don’t anticipate or understand.
This analogy can be used to explain why people may not recognize or take action against slow but significant changes happening around them. It also serves as a reminder that we should be aware of our surroundings and take necessary steps before it’s too late.
When you enter an employer’s safe harbor, you are getting in a tepid pot of water—but the temperature will gradually be increased by your employer.
While employers frame their benevolent relationship with you as providing a safe harbor and predictable paycheck, the fallout is the loss of professional autonomy—-which is the systemic issue that has ushered in the physician burnout crisis.
Doctors are boiling everywhere and feel stuck in these safe harbor pots!
In a cruel paradox, it turns out the safe harbor is not so safe after all.
Remember Your Small Business Super Powers
It’s time for you to wake from your slumber and understand that as a highly trained professional you are not a simple worker like the masses. And when I say that, please understand “mass workers” is not a derogatory term. I came from a long line of factory workers and “mass workers” getting paid fair wages is the backbone of our free market economy. They are valued and needed.
But you were meant for more.
You are equipped for more.
You have earned more.
You have dormant powers of small businesses that are just waiting to be activated.
You aren’t built to be controlled. You are built to provide medical care to patients in a micro-business structure—one that is filled with professional and personal autonomy.
While healthcare is a macro-economic concept, individual doctors providing medical care has always been and should continue to be a micro-economic experience.
You have the power to incorporate and not act like an individual worker in the marketplace—but too many of you have either forgotten you have this power or are fearful of what it means to “run a business” due to your brainwashed assumptions about what the means.
For example, in my PC-based employment lite contract, the only business I have to run is my virtual professional micro-corporation and it’s two employees (me and my wife as the book-keeper)—and I outsource most of that work for only 1 cent for every dollar earned. The point is that it’s easy and cheap.
On the practice side, my large corporate employer manages every aspect of the business operations of my clinical work. I have no business responsibilities and simply collect my paycheck. Here is a visual of this structure:
So when I am talking about activating your small business powers, I am not talking about traditional private practice, rather I am talking about a single-member professional micro-corporation.
It is a non-visible entity that mirrors you as an individual. In essence, it is you—but in the corporate version. Think of it as your corporate avatar that is used for conducting business for your professional services. In other words, it is the corporate you that then hires the individual you to do the work. The naked eye is unaware of its existence because all they see is the physical you. But the hidden fiduciary structures such as contracts, taxes, and such all know of your avatar’s existence because that is who they deal with—your virtual professional micro-corporation.
Honestly, I love the “invisible” aspect of this business structure that I virtually wear in my employment lite contract. I get all the benefits of not operating a medical clinic business (my employer does this), get paid FMV for my work, and everyone in my medical neighborhood from patients to peers—see me as a corporate employee. But on the back side, my accountant. lawyer and the government see me as both an individual and a professional micro-corporation. This less visible element provides me greater control and autonomy over my professional life as an independent contractor.
Virtual Micro-Corporations
While in the past, private practices provided the ideal professional micro-corporation experience, the times have changed.
Now doctors as individuals AND virtual professional corporations (rather than individuals) are becoming the best way to hold onto your autonomy while still interfacing with the host of job opportunities that exist under the control of larger corporations in a business to business relationships. But also afford the option of engaging in business-to-individual relationships such as DPC.
Professional Micro-Business Mindset
The process begins with having the right mindset. The best mindset is that rather than acting as an individual engaging in a business contract (employment), you must view yourself as a micro-business contractor who can contract out your professional services to any business or individual. The contractual arrangement doesn’t matter if it is short-term(locums or side jobs) or long-term (employment lite or side jobs)—in either case you are an independent contractor rather than an employee.
Business to Business
In medicine, typical professional micro-business-to-business contractual arrangements include:
-
Employment Lite with large corporate safe harbors
-
Side Professional Work
-
Locums Tenens
-
Telemedicine jobs
-
Your professional micro-corporation is the shareholder in a partnership or professional medical group corporation—most doctors are unaware that they can join a group or partnership as a micro-corporation rather than as an individual. Because some have a hard time seeing this, enclosed is a visual of that arrangement.
Business to Individual
Common business-to-individual contractual arrangements would include:
-
Direct primary care and direct specialty care models
-
Cash-only medical practices
-
Direct-to-consumer medical care of any type, for example, “Hims” or “Roman”
-
Concierge/Lifestyle Medicine
-
Integrated Medicine
-
Precision Medicine
Individual to Business aka Employment
The previously mentioned work options are in stark contrast to the status quo for you to individually contract with a healthcare business in a traditional employment arrangement as a W-2 worker.
Here you have been degridated by the title“associate” just like every other worker in the organization and are now re-labeled as a “provider” rather than “doctor”. It’s all part of the indolent brainwashing.
The ease of entry is high, but the downstream costs of being a high-income W-2 worker—like paying higher taxes, earning less money (20% less based on the 2022 Medscape physician compensation survey), and greater burnout will eventually become issues for you.
Most employed doctors ultimately discover employment is about control and your employer’s micro-management eventually leads to the loss of professional autonomy for you. This in turn is often central to the cascading events that lead to professional burnout. Professionals aren’t meant to be “mass workers” and corporate control and bureaucracy ultimately assault your personal and professional vitality.
There is a better path than traditional employment, and it’s time for doctors to be awakened from their slumber and catalyze a systemic change that will help them flourish regardless of where they work.
The secret to preserving your autonomy is to form a professional micro-corporation.
The stimulus for systemic change is for all doctors to form a professional micro-corporation and demand that all prospective employers provide the option to use it contractually for their job.
This will require proactive action and empowerment for you to know that you have earned the right to choose to be a contractor or an employee. If you are passive about it, you will be thrust into the status quo of being controlled as a W-2 employee of 3rd parties in the system who are vying for control of it—whether that is as a worker for the government or a big corporation.
Do Something Different
Starting your own micro-business as a doctor can be an exciting and challenging endeavor.
The first hurdle to doing this involves overcoming the mindset held by many modern doctors that you are better off simply choosing employment, rather than starting your own business. That is a myth, and false Y in your professional road. The fact is that every one of you can and should cloak yourself in your individual professional micro-corporation.
Then it should be up to you to how you want to stack or build your income sources through each of these 3 professional spaces:
-
Individual to Business—aka traditional employment as an individual W-2 worker
-
Business to Business—aka independent contractor through your micro-corporation as a 1099 worker
-
Business to Individual—aka self-employment through your micro-corporation with direct-to-consumer business relationships without 3rd party involvement.
The point is that you have earned this choice on how to build, stack and create your income sources. This is a new view of professional life where your diverse income sources create a preferred lifestyle and quality of life.
Thus your worker status should not be made for you by a large corporation whose less-than-altruistic motive is to gain control over your professional services by making you a W-2 worker. It’s not the only option.
This Is Not Traditional Private Practice
The other myth is that forming a professional micro-corporation means you are going into private practice.
Doctors transliterate starting a professional micro-corporation with going into private practice which includes managing employees, a medical practice, and competing with larger corporations for patients on the healthcare playing field. This is not what I am talking about because we can all see that traditional private practices are slowly vanishing—with a few pockets of exception.
The unawareness about a professional micro-corporation being different than private practice can be attributed to a lack of knowledge and exposure about your professional business structure options.
This is the exact reason Dr. Inc. exists. To inform and inspire you about all of your business options, with a special affinity for my personal favorite, the professional micro-corporation. This is not theory, it’s truth based on my own personal micro-corporation experiences as a doctor.
With the right guidance and support, doctors can overcome this mindset and become successful entrepreneurs and small business owners. There are many advantages to starting your own professional micro-corporation that can benefit both you and your patients. Even if you are traditionally employed, forming a professional micro-corporation is a wise move. You can download my free e-book about this here.
I am so passionate about this that I offer a free business coaching session for you through SimpliMD if you want to explore starting a micro-corporation. At SimpliMD specialize in helping physicians do this.
You can schedule an appointment here: https://calendly.com/drinc/45min
